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Sunday, 18 September 2016

Dr. R. Evan Ellis: Characteristics and Assessment of Russian Engagement with Latin America and the Caribbean

Introduction.The
following article assesses the challenge posed by Russian engagement in Latin
America and the Caribbean to U.S. strategic interests in the region.It highlights some of the most salient
characteristics of that challenge, then examines the general approach pursued
by Russia in engaging with the region, followed by a more detailed analysis of
specific Russian military and commercial activities there.It concludes by postulating conditions under
which the currently modest, albeit non-trivial challenge posed by Russia could expand
into a phenomenon of greater concern for the United States and the region.

Framing the Russian
Challenge in Latin America and the Caribbean. Of the major
extra-hemispheric actors conducting political, military, and commercial
activities in Latin America and the Caribbean, Russia most openly challenges
U.S. equities there.Nonetheless, when
viewed over the long-term, the People’s Republic of China (PRC) arguably poses
the greatest danger to the U.S. strategic position in the region, indirectly
but significantly undermining U.S. attempt to promote its values and its agenda
of democracy, human rights and rule of law in the Western Hemisphere, and
potentially challenging U.S. domestic security.

The relatively smaller
long-term challenge posed by Russia in Latin America and the Caribbean, by
contrast to that posed by the PRC, owes to limitations on resources available
to finance and sustain major Russian initiatives in the region, particularly under
the current regime of low international oil prices.Russia also has a limited number of countries
in the region which it has sufficiently close relations and leverage to engage
in activities that openly undercut the United States.Indeed, not even all of the regimes within
the Bolivarian Alliance of the Peoples of the Americas (ALBA) have been willing
to embrace Russian military deployments and base access agreements in recent
years.[1]

Similarly, Russian economic
engagement with the region is focused on a limited number of sectors: arms
sales, petroleum, mining, construction, nuclear technology and space,[2]
as detailed later.Latin American
businessmen and governments simply do not dream of access to Russian markets
and financing in the same fashion that they do with respect to the PRC.

To understand the challenge
posed by Russia to the U.S. in Latin America and the Caribbean, it is important
to assess Russian activities in the region through the lens of their linkage to
Russian initiatives and security challenges in other parts of the world in
which Russia has an interest.The two
occasions in recent years in which Russia has significantly expanded its
activities in Latin America have each grown out of its perceived challenge to Russian
interests in its own near abroad: in 2008, in response to rising tensions with
the U.S. and NATO over Russian support to Georgian break-away republics South
Ossetia and Abkhazia, and in 2014, as the U.S. and Europe similarly challenged
Russia over its role in the civil war in Ukraine.

The challenge posed by Russia
to the U.S. in Latin America and the Caribbean is also linked to the activities
of other extra-hemispheric actors in the region, including the PRC.Commerce with, and loans from the PRC and
other parties to anti-U.S. regimes such as those of ALBA increases the financial
solvency of those regimes, and indirectly, their latitude to engage with Russia
in ways provocative to the U.S., including Venezuela’s conduct of exercises
with Russian military forces in May 2015,[3]
or Nicaragua’s February 2015 agreement to receive Russian warships in its
ports.[4]

In addition, Russian
activities in Latin America and the Caribbean affect not only the United States,
but also its partners in the region.Russian military support to Venezuela, Nicaragua, and Cuba, and the November
2013 violation of Colombian airspace by nuclear-capable Russian bombers,[5]
for example, arguably created concern in the latter, which saw its lines of
communication to Europe and U.S. Atlantic-coast markets through the Caribbean
threatened by a ring of unpredictable, Russia-allied states.Similarly, Russia’s announcement in 2014 that
it was considering long range patrol flights into the Gulf of Mexico,[6]
arguably raised concern not only in the U.S., but also in Mexico, which shares
the Gulf with its neighbor to the north.

Finally, although the
challenge that Russia poses to the U.S. in Latin America and the Caribbean is
real and significant, it has arguably suffered important strategic setbacks
which must be considered in order to achieve a balanced assessment.

On one hand, Russia has lost
important ground in its attempt to sell arms to the region.This includes U.S. victories in foreign
military sales at the expense of Russian options, such as the sale of Blackhawk
helicopters to replace Russian Mi-17s in the inventory of the Mexican Army and
Navy.It also includes Russian losses to
the PRC in selling arms to important clients in the region including Peru and
Argentina.[7]

At the same time the sustained
fall in international oil prices has taken away from Russia important resources
required to underwrite its commercial projects, and to finance its military
sales to the region, as well as to sustain Russian initiatives globally.

Finally, Russia has lost
political leverage with its most important allies in the region: Venezuela,
Cuba, and Argentina.

In Venezuela, the unfolding
economic and political collapse of the regime of Nicholas Maduro has thrown
into doubt the future of Russia’s most important arms purchaser, and the Latin
American partner most willing to collaborate with Russia in provocative actions
against the U.S. in the region.

In Cuba, faced with the
collapse of its principal economic patron, Venezuela, the Castro regime has
pursued a reapproachment with the United States in which it has avoided actions
excessively provocative toward the U.S. as it has sought the end to U.S.
economic sanctions and renewed access to U.S. markets. As it has courted the
U.S., Cuba has refrained from diplomatic positions and military cooperation
with Russia that would excessively antagonize the U.S. such as the reopening of
the signals intelligence facility at Lourdes.[8]

Finally, in Argentina, the
October 2016 election brought conservative Mauricio Macri to power, defeating Daniel
Scioli, the preferred candidate of the outgoing pro-Russian government.The political change has thrown into doubt
important Russian projects in the country, including sales of Russian arms, and
three nuclear reactors, as well as Russia-Argentina political cooperation.

Russia’s Modus Operandi
in Engaging Latin America.Russia has generally pursued four lines of
effort to strengthen its ties in Latin America and the Caribbean.First, it has sought to rebuild the political
relationships which served as the pillars of its position in Latin America
during the Cold War, principally those with Nicaragua and Cuba.In Nicaragua, Russia leveraged the return to
power of Daniel Ortega and his Frente Sandinista de Liberación Nacional
(FSLN) in January 2007, to make Nicaragua a centerpiece of its activities in
the region, including Nicaraguan support to Russian activities in Georgia, the
Ukraine and Syria, as well as commercial deals and security cooperation such as
the Marshal Zhukov center for military training in Managua, opened in April
2013.[9]Although Cuba was similarly Russia’s closest
ally in the region during the Cold War, Russia’s efforts to rebuild its
relationship with Cuba have only been partially successful due to the
perception among some Cuban party officials that the nation suffered greatly
following the collapse of the Soviet Union in 1991, due to the abruptness and
the extent of Russia’s withdraw of financial assistance.Nonetheless, Russia has managed to rebuild
some of its ties with Cuba, helped by its forgiveness of $30 billion in Cuban
debt accumulated during the cold war.[10]

Beyond the reconstruction of
Cold War networks, Russia has also sought to strengthen relationships in the
region through military sales, targeting countries which purchased significant
amounts of equipment from the Soviet Union.The partner with which Russia has most successfully leveraged former
military sales, despite the absence of a strong Patron-Client relationship
during the Cold War has been Peru. Peru acquired principally Russian equipment
for its Armed Forces during the presidency of General Juan Velasco Alvarado
from 1968-1975, and continued to buy Russian equipment during the presidency of
Alberto Fujimori, including the purchase of 12 Mig-29 fighters as late as 1997.[11]Correspondingly, when Peru sought to
modernize and upgrade its arsenal, and buy new equipment, Russia’s arms export
agency Rosboronexport marketed itself as the logical supplier.

Particularly in the Southern
Cone, Russia has also courted Latin American countries by purchasing their
commodities.The most prominent examples
are Argentina and Uruguay, from which Russia has imported significant
quantities of beef.[12]

Finally, Russia has also
sought to exploit the desire of some countries of the region to escape from
dependence on the U.S. and western institutions such as the World Bank and the
International Monetary Fund.Principal examples
include Venezuela, which turned to Russia as an arms supplier in July 2006 when
the United States refused to sell it spares for its U.S.-built F-16 fighters,[13]
and Argentina, which, isolated from international creditors over its 2001 debt
default, embraced both Russia and China as a source of investment, technology
projects, and political support on issues such as its claim over the Falkland
Islands (Islas Malvinas).[14]

With respect to style, the
Russian approach to Latin America contrasts with the other principal
extra-hemispheric actor engaging with the region, the PRC.Russia is far less apologetic than China in
engaging the region, seeing itself not as intruding in the region, but having a
legitimate presence there, dating to the cold war.

As Russia has engaged with the
region, it has also maintained a complex strategic communication posture,
featuring deliberate mixed messages.When, for example, Russia sent T-160 Backfire bombers to the region in
2008 to remind the United States that it could deploy nuclear-capable weapons
into its backyard,[15]
it was careful to remind the United States that those bombers were not actually
carrying nuclear weapons.Similarly, in
2014, during the escalation of tension with the U.S. and Europe over the
conflict in the Ukraine, Russian government officials mentioned Russian
interest in re-opening the cold-war era signals intelligence facility at
Lourdes, Cuba, and negotiating base access agreements throughout the Caribbean
basin.Yet Russian President Vladimir
Putin seemingly contradicted his own personnel, declaring that Russia had no
intention of re-opening Lourdes.[16]

Russian Military
Engagement in Latin America.Military sales and counterdrug cooperation
has been the principal vehicle for Russian engagement in Latin America and the
Caribbean during the contemporary period, although it has pursued commercial
projects in the region as well.

Since its re-engagement with
the region in 2008, Russia’s principal military partners in the region have
been Venezuela, Peru and Brazil, although it has also maintained important
relationships with Nicaragua, Argentina and Mexico, among others.Russia’s principal military export product to
the region has been helicopters, with more than 400 currently in service in
Latin America and the Caribbean,[17]
of which, an estimated 320 are transport helicopters of the families
Mi-8/Mi-17.

Venezuela has been the
principal purchaser of Russian military equipment in the region, accounting for
$11 billion of the $14.5 billion in sales to the region by the Russian arms
export agency Rosboronexport, between 2001 and 2013.[18]As
noted previously, Venezuela turned to Russia beginning in 2006, purchasing
military rifles, helicopters, and Su-30 fighter aircraft, although since the
original sales, Russia has gone on to supply Venezuela with a broad range of
equipment from T-72 tanks to BMP-3 and BTR-80 armored personnel carriers, to
self-propelled rocket launch systems, and coastal defense missiles, among other
items.[19]Venezuela has, however, had difficulties with
Russian aftermarket support for the equipment provided, including the supply of
spare parts for the engines of Su-30 fighters previously sold by Russia,
leading to the temporary grounding of the Venezuelan Su-30 fleet.

In addition, in recent years,
however, Venezuela has also made important acquisitions of Chinese military
equipment, including K-8 and L-15 fighters, and VN-1 armored personnel
carriers,[20] leading
to comparisons unfavorable to Russia regarding the perceived good quality of
the electronics package and maintenance support for its military goods.Indeed, Russia’s offer, in 2015, to sell
Venezuela 12 additional Su-30 fighters in a deal valued at $480 million,[21]
at a time in which the Venezuelan economy was in a state of crisis, and the
Russian ability to finance the deal was limited due to low international
petroleum prices, may be attributed to Russian concerns over losing its market
share in military sales to the Chinese.

Beyond Venezuela, Russia has
also sold significant quantities of military goods to Peru.Building on the preponderance of Russian
equipment in the Peruvian Armed Forces since the era of General Velasco
(1968-75), in 2008, Russia won an important contract for the maintenance and
upgrade of Peru’s Mig-29s,[22] and in 2010 Rosboronexport sold 6 Mi-17
transport helicopters and 2 Mi-35 attack helicopters to Peru in support of
operations against the Sendero Luminoso terrorist organization and
narcotrafficking in the Apurimac, Ene, and Mantaro river valleys (VRAE-M).Building on the successful sale, in 2013,
Rosboronexport sold Peru an additional 24 Mi-17 helicopters, accompanied by the
establishment of a maintenance center in the Peruvian city of Arequipa.[23]

As in Venezuela, however,
Russia has lost ground in recent years to the PRC with respect to arms sales,
including an important victory by the PRC in a contract replacing Peru’s aging
BM-21 artillery system with Chinese-built Type 90B truck-mounted multiple
launch rocket system, beating out the Russian system SMERCH.[24]

Brazil has arguably been
Russia’s greatest hope, because of the size of its armed forces and economy,
and thus its potential as a market.Yet
Brazil has also arguably been Russia’s greatest disappointment in the region
with respect to such sales.In 2008,
Rosboronexport sold Brazil 12 Mi-35 attack helicopters.Nonetheless, Russia was hesitant to provide
its most sophisticated arms and electronics package with the helicopters,
possibly out of concern that Brazil’s own arms industry would incorporate such
technology into its own arms, which compete with those of Russia in some
markets.As a consequence, in 2011, the
Mi-35 contract was not renewed.[25]Similarly, Russia hoped to sell its Su-35 fighter to Brazil as part of
the nation’s FX-2 fighter modernization program, yet the Brazilians ultimately
chose to purchase the Swedish Saab JAS-39 Gripen, with the Russian Su-35 not
even included among the final contenders.[26]

In 2015, in the context of the
approaching 2016 Olympic games to be hosted by Brazil in Rio de Janeiro,
Rosboronexport hoped to sell Brazil its Pantsir S-1 air defense system in a
deal worth an estimated $1 billion,[27] yet Brazil’s deepening recession,
combined with its corruption scandal, sidetracked the deal.[28]

Beyond Russia’s three
principal clients in Latin America, it has also sold its military helicopters
and other equipment to a range of other actors, including Nicaragua, Argentina
and Mexico.

In 2013, Russia signed an
agreement with Nicaragua to support the modernization of its armed forces,
eventually leading to the sale to Nicaragua of two Mi17s,[29] as well as aircraft,BMP-1 armored personnel carriers, BM-21 mobile rocket launchers, and PT
76 light armored vehicles.[30]

With respect to Argentina, Although
Russia sold the government of Christina Fernandez 3 new Mi-17 helicopters,[31]
as noted previously, larger deals involving the sale of its older generation
Su-24 Flanker aircraft were sidetracked by the pursuit of deals with the PRC
which, although involving different equipment, ultimately competed for the same
limited Argentine resources.

With respect to Mexico,
although the Mexican Army and Navy purchased Russian helicopters in the 1990s
and 2000s, and subsequently spent money on upgrading them and extending their
service lives,[32] in
2015, Mexico took important decisions to replace its aging fleet of Russian
helicopters with the U.S. Blackhawk.

With respect to counterdrug
cooperation, Russia has made Nicaragua the focal point of its engagement with
the region.It has constructed, and is
currently in the process of expanding, a training center in Managua, Nicaragua,
the Marshal Zhukov center,[33]where it provides counter narcotics training
to security personnel from across the region, including states who would not
otherwise engage directly with Russia in the arena of military cooperation.

More recently, Russia has also
opened a second counter narcotics center in Peru, as well as sharing
intelligence and coordinating operationally with Brazil, Peru, Bolivia and
other states against transnational criminal organizations engaged in smuggling drugs
from Latin America to Russia.

Russian Commercial
Engagement in Latin America. Beyond military activities, Russian
companies are commercially active in a subset of Latin American and Caribbean
countries, in a limited number of sectors, including petroleum, construction,
mining, nuclear technology, and the space industry.

In the petroleum sector, the
most significant activities of Russian companies are concentrated in Venezuela,
where the firm Rosneft has five ongoing projects, including the Junin-6
oilfield in the Orinoco tar belt, and the joint venture Petromonogas.[34]The head of Rosneft, Igor Sechin, is
reportedly close to Russian President Vladimir Putin and shares a background in
the intelligence services with him.Rosneft has progressively acquired the stakes of other Russian companies
such as Lukoil, Gazprom, TNK, and Surgutneftegas, as each has withdrawn from
the country in recent years due to difficulties in operating there.Most recently, despite the ongoing political
crisis in Venezuela and the collapse of its economy, Rosneft paid $500 million to
the Venezuelan state oil company PdVSA to expand it share in the joint
petroleum venture Petromonogas.[35]

Beyond Venezuela, the Russian
company Lukoil committed to an oil project in Mexico in January 2014 as the
country opened its oil sector to foreign investors,[36]
while Gazprom has expressed interest in exploring for gas and developing Liquid
Natural Gas (LNG) facilities in Bolivia.[37]

Despite such advances,
however, current low international oil prices have significantly limited the
resources of Russian oil companies to pursue investments in the region, and
Lukoil was forced, in 2012 to sell off its operations in Colombia in order to
have sufficient resources to pursue more lucrative projects in the Middle East.[38]

Beyond petroleum, Russia
Aluminum Corporation (RUSAL) has a presence in the Caribbean basin in Guyana
since 2006,[39] and Jamaica since 2007,[40] although as in the petroleum sector, its
projects have been hampered by low international mineral prices.Most of Russia’s operations in both Guyana
and Jamaica have been closed down, and Russia is reportedly in negotiations
with Chinese companies to sell its Alpart facility in Jamaica.[41]

In the construction sector,
the Russian firm Inter RAO is involved in hydroelectric projects in Ecuador
(Toachi-Pilaton)[42] and
Argentina (Chihuido-2), financed by Russia’s development bank Vnesheconombank.[43]Energolatina has a contract for hydroelectric
turbines in Panama, and the Russian construction equipment firm Power Machines
sells limited quantities of equipment, often in support of Russian projects,
throughout the region.

With respect to nuclear
energy, in March 2016, Rosatom signed a $300 million contract with the
government of Bolivia to construct a small nuclear reactor and research complex
in the country,[44] and
hopes to supply three reactors for power generation to the Atucha nuclear
complex south of Buenos Aires, Argentina.[45]

In space services, Russia has
signed contracts with various nations of the region (which) including Peru, to
secure services from its GLONASS satellite constellation, the Russian
equivalent of the Global Positioning System.[46]

Factors Potentially
Increasing the Russian Challenge in the Region.While the
challenge posed by Russia to U.S. interests in Latin America and the Caribbean
is serious albeit modest in character, a number of plausible developments could
rapidly expand the risk that such engagement poses:

First, an increase in
international oil prices, possibly brought on by a conflict in the Middle East
or the eventual success by OPEC members to limit supply,[47]
could increase the revenue stream from Russia’s petroleum exports, helping to
restore its resources for financing investments, arms sales, and other initiatives
in the Western Hemisphere and elsewhere in the word.

Second, escalating tension
between Russia and the U.S. over its near abroad, or in other areas in which it
is strongly engaged such as Syria, could motivate Russia to launch new
initiatives in Latin America to distract the U.S. from engaging Russia in those
other areas, just as it did in 2008 during the Georgia civil war, and in 2014,
at the outset of the civil war in the Ukraine.

Third, if Cuba loses hope that
avoiding conflict with the U.S. will help it to regain access to U.S. markets,
it could return to its historical disposition to collaborate with Russia against
U.S. interests in the Western Hemisphere in a more aggressive fashion than it
has since January 2015 when it officially began its reapproachment with the U.S.

Fourth, the government of El
Salvador, whose current president Salvador Sanchez Ceren and other leaders
worked closely with the Soviet Union during the Cold War, could decide to more
openly embrace Russia.Reportedly,
significant goodwill exists toward Russia among the current Salvadoran
leadership, but to date, it has avoided overtly close ties because of El
Salvador’s substantial economic dependence on the U.S., including remittances
from the more than 3 million Salvadorans living in the United States, U.S. aid
to El Salvador under the CARSI program, and the immigration status of hundreds
of thousands of Salvadorans currently in the U.S. under Temporary Protected
Status.

Fifth, if the Maduro regime in
Venezuela fears that it is on the verge of losing power, it could more
aggressively embrace Russia and China than it has to date, in order to preserve
its own political future in return for Russian loans and expanded investment in
sectors such as petroleum and mining.

Sixth, ALBA states Bolivia and
Ecuador could embrace Russia more aggressively than they have to date.It is notable that both countries
participated in Russia’s wave of diplomatic and economic initiatives as it
re-engaged with the region in 2008, yet neither were mentioned among those ALBA
states with which Russia highlighted in 2014 as candidates for military base
access agreements.[48]

In yet another scenario,
increased tensions between China and Taiwan could lead the PRC to return to its
pre-2008 practice of “checkbook diplomacy,” openly supporting construction of
the Nicaragua Canal in return for Nicaragua’s diplomatic recognition of the
PRC.

Finally, either Peru or
Mexico, both of whose Armies have historically close relations to Russia with
respect to both equipment and personnel contacts, could retreat from their
current moderately pro-U.S. posture, to more evenly balance cooperation with
the U.S. and Russia.For Peru, such
change could be driven by a change in government following the nation’s May
2016 presidential elections.While such
a change by Peru or Mexico might not directly threaten the United States, it
would potentially undermine an important pillar of the U.S. position in the
region.

Recommendations.The good news for the U.S. with respect to Russian
engagement in Latin America and the Caribbean is that, by contrast to the PRC, Russia
is not currently a resource-rich competitor to the U.S. which can tempt the
region with billions of dollars in loans, investments, and purchases of the
region’s commodity exports.Yet Russia
is a skillful, determined, nuclear-armed competitor with significant knowledge
of, and historical presence in the region.Moreover, absent unforeseeable changes in the U.S. political landscape,
the resources and political interest on the U.S. side for responding to Russian
engagement in Latin America and the Caribbean are not likely to expand
either.

The U.S. must thus skillfully
play a limited hand in addressing Russian engagement with the region.On the one hand, it must continue to be a
reliable partner to the states of Latin America and the Caribbean, avoiding,
where possible, “self-inflicted wounds,” such as cutting theater security
assistance to its partners during future budget crises, as the U.S. Department
of Defense was forced to do in 2013.

The U.S. should also consider
working more extensively in the region with extra-hemispheric partners whose
strategic goals with respect to the region are compatible with its own.Candidates include India, Japan, and Korea, as
well as major in-region actors such as Brazil.Each of these potential partners may provide interested countries in
Latin America and the Caribbean a range of engagement opportunities in the
security domain, as well as options for investment and commercial engagement that
do not threaten U.S. strategic interests.

Finally, the U.S. should continuously
monitor the situation in Latin America and the Caribbean for signs of the type
of game-changing scenarios highlighted in the previous paragraphs, which could both
require, and help create the disposition among U.S. policymakers for a
better-resourced and more aggressive U.S. response.

By contrast to Russia, the
U.S. is connected to Latin America with respect to its geography, families, and
the interdependence of its economies.What transpires in the region will affect U.S. interests, as well as
those of the region, whether or not the U.S. anticipates and effectively rises
to that challenge.

This article (is a customized version) of the English-language article: "Characteristics and Assessment of Russian Engagement with Latin America and the Caribbean," was FIRST published by the journal of the Strategic Studies Institute of the Chilean Army War College, "Ensayos Militares."

"Cooperation and Mistrust Between China and the U.S. in Latin America."

The article is a chapter in the new edited volume The Political Economy of China-Latin American Relations in the New Millennium. (Carol Wise and Margaret Myers, Eds. Routledge, 2016. Pp. 31-49).

This academically-oriented analysis attempts a balanced examination of both U.S. and Chinese concerns regarding expanding PRC engagement in the region, including recommendations for possible areas of Sino-U.S. collaboration in the hemisphere.

The edited volume also contains a number of thoughtful chapters on specific aspects of Chinese engagement in Latin America by some of the leading scholars in the field which I recommend to students of the field, and for consideration in course syllabi.